TA Corp bets on the region

/ The Edge Property |

January 20, 2017 10:00 AM SGT

Singapore-listed property developer and construction group TA Corp had its origins as a building contractor. The company was started 40 years ago by Lion Tiong Kui, the father of group CEO Neo Tiam Boon. At the time, the company was named Liong Kiam Teck, after the current executive chairman and Neo’s eldest brother. Deputy chairman Neo Tiam Poon and executive director Neo Thiam An are also Neo’s brothers. All in, there are 10 sons and two daughters in the family, with Neo the youngest of the 12. “And yes, we all have the same father despite the different surnames,” he says.

According to Neo, his two elder brothers originally bore his father’s surname, Lion. However, they changed it to “Liong” by deed poll. “They did not appreciate being called ‘Lion’,” says Neo. “It was mainly a registration problem in those days. My parents were illiterate, and it was very confusing. Depending on your dialect, you could be Liong if you were Cantonese or Neo if you were Hokkien.”

Under the stewardship of Neo’s father, the construction company, which later became known as Tiong Aik Construction, built the Empress Place Food Centre in 1973. At one point, the contractor was also known as “the King of HDB” as it secured many of the public housing building contracts. However, when the public housing sector became more competitive in the mid-1990s with the entry of mainland Chinese construction companies, Tiong Aik switched to building private-sector projects instead.

It was also in 1996 that the group decided to venture into property development, which was when Neo joined the company. He was instrumental in steering the group towards property development. “I saw a lot of synergy between building construction and real-estate development,” he says.

The company was listed on the Singapore Exchange in 2011 as TA Corp, with Tiong Aik Construction as a wholly-owned subsidiary.

Neo Tiam Boon, group CEO of the Singapore-listed property developer and construction company

A fine balance

Tiong Aik Construction continues to maintain its developer clientele, which include mainstream property giants CapitaLand, City Developments, Keppel Land, Allgreen Properties and Wing Tai Holdings. “That relationship still works very well today,” says Neo. “We continue to develop small and medium-sized projects so that we don’t compete directly with the big boys.”

For instance, Tiong Aik recently completed CapitaLand’s Marine Blue, a freehold 124-unit private development on Marine Parade. Last May saw the completion of the 920- unit Riversails on Upper Serangoon Crescent by Allgreen Properties. The project was also built by Tiong Aik. It was the contractor for Nouvel 18, a 156-unit luxury condominium project designed by French architect Jean Nouvel and jointly developed by City Developments and Wing Tai Holdings. And in Tiong Bahru, Tiong Aik is building Keppel Land’s 500-unit Highline Residences. The project is scheduled for completion later this year.

TA Corp’s first property development was the 96-unit Casa Rosa on Lorong Ong Lye in How Sun estate, off Bartley Road. The project was completed in 2001. Since then, the group has ventured to Balestier and East Coast, as they are mature estates and popular with investors and owner-occupiers, says Neo.

Its projects in the East Coast include Auralis in Telok Kurau, as well as Coralis and the adjacent Parc Seabreeze on Joo Chiat Road. Last June, it completed its boutique strata landed housing project, Terra Villas, on Jalan Sayang, off Sims Avenue East. The project comprised seven strata terraced houses.

With the East Coast becoming more developed, the group has shifted its focus to the West Coast. Neo says investor interest has picked up there, especially with the upcoming high-speed rail terminus in Jurong East and the government’s plan to turn Jurong East into Singapore’s second CBD.

Recent projects

The latest project by TA Corp is 12 on Shan, which held its preview on Jan 14. More than 70% of the units in the 78-unit project are one-bedroom- plus-study apartments from 538 sq ft, and two-bedroom units from 689 sq ft.

Located on Shan Road, off Irrawaddy Road in Balestier, 12 on Shan is a redevelopment of the former Shan Court, which TA Corp purchased en bloc for $41.4 million in 2013. It is across the road from the New Phoenix Park Police Headquarters and Ministry of Home Affairs. It is also near Health City Novena, whose development is gathering pace, says Neo.

The model of the 78-unit 12 on Shan, which previewed on Jan 14

Officially launched in October 2013, Health City Novena will have five new healthcare facilities including a National Centre for Infectious Disease, a new building for intermediate care next to Ren Ci hospital and an expansion of outpatient and day treatment clinics at Tan Tock Seng Hospital.

There will also be a Learning Hub, with three new buildings added to the existing Lee Kong Chian School of Medicine on Mandalay Road.

Another project developed by TA Corp in Balestier is Ascent @ 456, which has just obtained its Temporary Occupation Permit (TOP). Located off Balestier Road and Jalan Rama Rama, Ascent @ 456 is a freehold mixed-use development with 28 residential units and 17 strata shop units.

According to Neo, the residential units at Ascent @ 456 are fully sold. TA Corp has decided to keep the 17 shop units at the project and rent them out instead of launching them for sale, given that demand for strata commercial units has softened since the total debt servicing ratio (TDSR) loan framework was introduced in mid-2013.

The group is already in discussions with some potential tenants. “When the time is right, we will sell the SPV [special purpose vehicle] holding these units,” says Neo.

The newly completed mixed-use development Ascent @ 456, which comprises 28 residential units and 17 strata shops

The Skywoods

While TA Corp prefers to stick to boutique freehold developments, it has participated in tendering for government sites in joint ventures with others. “It is mainly to reduce risk, especially with the recent property cooling measures still in place,” says Neo.

One such development is the 420- unit The Skywoods at Dairy Farm Heights. TA Corp had purchased the site in a government land tender as part of a consortium in September 2012 for $244.3 million. The biggest stakeholder in the consortium was Hock Lian Seng with 50%, followed by TA Corp (22.5%), King Wan (17.5%) and Far East Distillers (10%).

The Skywoods had a slow start when it was first launched in October 2013, just a few months after the TDSR loan framework was introduced. However, it was fully sold six months ahead of its completion in December. Prices of units sold ranged from $1,118 to $1,331 psf, based on caveats lodged from April to June last year.

The recently completed 420-unit The Skywoods, which was fully sold as at June last year

The project fronts the Dairy Farm Nature Park, and behind it is the landed housing estate of Chestnut Drive, off Upper Bukit Timah Road. “To me, it is a great location because of the greenery,” says Neo. “In Singapore, we live in a concrete jungle. So, we targeted families who did not mind living farther away from the CBD and would rather live close to nature.”

Interest in The Skywoods also picked up following the opening of 12 Downtown Line stations in December 2015, including the Hillview MRT station, which is closest to the development.

The German European International School announced in 2015 that its new campus will be located at Dairy Farm Heights, next to The Skywoods. An added bonus for TA Corp was being awarded the contract to build the new campus in January last year.

Product quality plays an important part, Neo notes. TA Corp’s wholly- owned subsidiary and construction arm, Tiong Aik Construction, built The Skywoods. “We pitch ourselves as a quality developer and we don’t mind paying a bit more for quality materials,” continues Neo.

Cambodia venture

Besides Singapore, TA Corp has ventured to China, Cambodia, Myanmar, Malaysia and Thailand over the past decade.

At the beginning of 2016, TA Corp launched The Gateway in Phnom Penh. The mixed-use development comprises a 36-storey tower with 299 strata-titled office units, a 39-storey block with 572 apartments, and a double-storey retail podium. The project is located on Russian Boulevard, a main thoroughfare in the CBD.

At TA Corp’s The Gateway in Phnom Penh, 33% of residential units and 45% of strata office units have been sold

Source: TA Corp

The strata office units at The Gateway were launched in Singapore, Taipei and major cities in China. Many of the investors in the strata office units are from Taiwan. The residential units at The Gateway, on the other hand, was launched only in Cambodia. As at end-September 2016, about 33% of the residential units and 45% of the office units were sold.

The Gateway is a joint-venture project between TA Corp and Cambodian property developer Ly Kunthai. Neo says he has known Ly for 20 years. “He came to Singapore to study and stayed with my family,” he says. “He is now 40 years old, and has become a very successful and influential developer, and a trusted partner.”

Artist’s impression of De Iyara Grande at Pathumthani Province, Thailand

Source: TA Corp

Distribution business in Myanmar

Besides real estate, TA Corp also has a lubricants and tyre distribution business through Sino Tac Resources, which it purchased in 2012. Founded in 1999, Sino Tac Resources has been the sole distributor of BP’s high-performance motor oils and lubricants in Singapore since 2007. It is also expanding into the region, including Thailand.

In 2013, Sino Tac ventured into Myanmar with a JV partner to pursue the distribution business there. A year later, it secured the sole distributorship for Shell petroleum and lubricants, including AeroShell aviation lubricants. Sino Tac is also the sole distributor for GS Oil, Continental tyres and Italy’s Evaco trucks in the country.

Neo also has plans for property development in Myanmar. He has secured a partner with a huge landbank in Mandalay and Yangon. TA Corp’s first development is likely to be a 170-unit residential project in Yangon.

The project has yet to be launched as it is waiting for planning approval from the authorities. What is hampering the Myanmar property market is the lack of mortgage financing. “You have people who want to buy homes, but can’t get a mortgage from the banks,” says Neo.

Catering to a domestic market in Thailand

TA Corp ventured into Thailand five years ago. Initially, it handled project management for other developers’ projects. Four years ago, it ventured into property development. However, its projects are concentrated in Pathum Thani province in northern Bangkok. Its first project was the 65- unit De Iyara, which was completed in August 2014. The second project, a 50-unit development called De Iyarashare, was completed in April 2015. Its third project, the 72-unit De Iyara Grande, was completed in March 2016.

The first two projects were fully sold within two weeks, while the third was 75% sold within a fortnight, says Neo. The projects saw strong local demand and were therefore not launched in Singapore.

Asian focus

In 2014, TA Corp invested RM50 million in the construction of a precast concrete components manufacturing plant in Pontian, Johor. The plant supplies pre-cast components to contractors in Singapore and Malaysia spanning the infrastructure, residential and commercial sectors.

The group is also exploring the possibility of setting up a second precast concrete components manufacturing plant in Myanmar, says Neo.

In China, TA Corp’s associate Dalian Shicheng Property Development Co Ltd is the developer of Singapore Gardens, a township project in Dalian city. The project completed the development of its seventh residential phase in 2015, which has 2,949 units. The final phase of the development, which comprises commercial properties, a shopping complex, hotels and serviced residences, has yet to be developed.

Neo: We will continue to focus on the markets in Asia

TA Corp owns a 25.37% stake in Dalian Shicheng. According to Neo, Dalian Shicheng will “monitor the market environment closely before launching the final phase of the development”.

Having seen two major crises over the past 20 years — the Asian financial crisis in 1997/98 and the global financial crisis in 2008/09 — Neo reckons the current slowdown is “the worst”. He adds: “This is a global slowdown [and the economy] cannot be stimulated by one particular country.”

Therefore, TA Corp will remain prudent in its expansion plans. “We will continue to focus on the markets in Asia,” says Neo. The real-estate market in Singapore remains “difficult” in the medium to long term, he adds, with developer margins already shaved to less than 10%. “The property cooling measures have been very effective, and prices will see moderate growth over the long term.”

This article appeared in The Edge Property Pullout, Issue 763 (Jan 23, 2017) of The Edge Singapore.

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